Archive for August 18th, 2011

Will the market go up? Will it go down? I have no idea. I do know that based on fairly long-standing historical patterns, the current market level is below the norm. Not by a lot, but some. Is putting money in a good idea? I don’t know. That depends a lot on what happens with the dollar, inflation, our political system, and other factors that this picture doesn’t capture.

But according to this picture, putting money in now is less stupid than in, say, 2000, though not as smart as putting money in in, say, 1982.

Asia is down a couple of points. Tomorrow’s open looks weak, though not bad. I still don’t think people will be eager to hold over the weekend.

Like this:

At this moment (1AM Eastern), looks like another down open for the markets.

In Asia, there are concerns about a strong yen hurting Japanese exports and inflation and overinvestment in China (as opposed to creating a consumer economy) leading to slower growth, and maybe a crash in 18 months. A more immediate fear is hidden debt (municipal debt ordered by the central government to keep the music going) and dodgy Chinese financial reports.

Another issue is the price of precious metals, which Wells says is a bubble. Since the total value of all gold mined in human history is less than $400B, and only 20% of that is traded, we’re talking about a bubble substantially smaller than the mortgage and CDS debacle. So, that could be a catalyst for another 5 or 10% fibrillation flutter, but I can’t see it being the end of the world.

Then there’s the Swiss franc, definitely in bubble territory: you have to pay interest to hold francs. How large a pop there will be, I don’t know. Since currency markets are even more heavily leveraged than metals, I would worry. Also, the strong Swissy is damaging the real economy by causing mortgages in Eastern Europe and European banks who hold derivatives denominated in francs. If the Swiss were smart, they’d simply print currency, give it to Italy and Spain, and screw the speculators royally. But I doubt they have the proper sense of humor.

The European debt situation, to round out the bogeymen in the immediate vicinity, is looking dicey. I don’t see any long-term solution emerging, so if another fear catalyst appears, investors will bolt. But the spreads on Italian and Spanish debt have narrowed a lot.

Glenn Mulcaire, the private investigator at the centre of the News of the World phone-hacking affair, is suing the now defunct tabloid’s publisher News International in an attempt to force the company to pay his legal bills.
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Murdoch revealed in evidence provided to the culture select committee on Tuesday that News International had funded Mulcaire’s legal bills to the tune of about £246,000.
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Following Murdoch’s 20 July comments, Mulcaire’s solicitors Payne Hicks Beach wrote to News International to inform the company it was still legally liable to pay for a high court appeal he was fighting.

James Desborough, an award-winning reporter at the former News of the World newspaper, has been arrested by officers investigating the phone-hacking scandal.

Desborough was arrested on suspicion of conspiring to intercept communications, contrary to section 1 (1) of the Criminal Law Act 1977…

His move to the US makes his arrest, the 13th made by Operation Weeting, particularly significant. If Desborough was involved in hacking while in Britain, as police appear to believe he was, it raises the question of whether he practised those techniques in the US – and if so, whether he was the first and only News of the World journalist in the US to do so.

Rupert Murdoch’s News Corporation has warned that it is “not able to predict the ultimate outcome or cost” of the phone-hacking scandal, admitting it could “impair” its ability to conduct its business.
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The report also revealed that Freud Communications, the public relations firm run by Matthew Freud, Rupert Murdoch’s son-in-law, was paid $202,000 (£122,000) by News Corp in the financial year ended 30 June 2011 for “press and publicity activities” related to Shine Group.
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Elsewhere in the report, it is revealed that Rupert Murdoch’s wife Wendi Deng was paid $92,000 in 2010 and $100,000 in 2009 to “provide strategic advice” to Myspace in China.